Market Fundamentals are Appalling

prieur · #1 (**permalink**) 07-06-08, 04:27 PM

Hello from Switzerland (on holiday), otherwise Cape Town

A fascinating discussion a few weeks ago in welling@weeden with Albert Edwards and James Montier of Société Générale is republished in this post.

They are, in a word, skeptics, and at this juncture most deeply skeptical of any and all notions that "the worst is over". The recession, which has barely begun, is more likely to be deep than shallow, market valuations are hideously expensive and the "flation" policymakers should be worried about starts with de-, not in-.

Here is the link: Market Fundamentals are Appalling » Investment Postcards from Cape Town

Enjoy the read.

Stocktrading101 · #2 (**permalink**) 07-07-08, 01:58 AM

Prieur, it is an honor to have you on the forum. I hope Switzerland is treating you well and I look forward to seeing you around the stocktradingtogo site more often.

aquaswim47 · #3 (**permalink**) 07-08-08, 11:26 PM

You are all also welcome at ZeccoForums. You would be in good company there. There are some real bears there. I don't believe we will have the sky fall this time around, but I do think it's around the horizon. I think there are some missing ingredients, most notably China's desire to call our debt. I will send a cross-link to have Zecco members join StockTradingtogo.com as both forums have a lot to offer.

I am bullish, myself, (was bearish starting last year thru 14,000). At 13,000 I felt like it was fair value so I've been bullish ever since. 5 consecutive years of growth inevitably had to come to an end; there would be some reason why we would decline. It just happened to be a credit crisis that we all knew was in our back pocket, but no one really wanted to play that card which is why it took until people started being foreclosed on for the market to reflect it in the current prices.

Don't think Europe will be unscaved. They are going thru it too and I believe it will be much worse since the ECB has been hawkish on interest rates. I called China's demise and I believe it will fall further (similar to the Nasdaq of 2000-2002). However, I believe their economy will be strong; it's just natural to see such a large decline (i.e. 70%) if the market falls from a 14% growth rate to a more normal 7% growth rate.